Renewable Diesel Gaining Momentum

By Tina Caparella

Since reporting in this column in the December 2015 Render that global renewable diesel use had tripled in the past four years, there is more news this alternative fuel that often uses rendered animal fats and oils as a feedstock continues to gain support.

California Governor Jerry Brown announced in early December that all state agencies will now be required to purchase renewable diesel for their fleets of diesel-powered vehicles and equipment. This move will ensure state government meets targets set by the governor to reduce greenhouse gas (GHG) emissions 40 percent lower than 1990 levels by 2030.

Helping California to meet that aggressive goal will be Golden State Petroleum (GGP), who was selected to supply renewable diesel to 80 percent of the state’s agencies. For the past two years, GGP, headquartered in Martinez across the bay from San Francisco, California, has been working closely with Neste, the world’s largest producer of renewable diesel, to make the fuel available to both public and private fleets in California. Under a two-year contract, GGP will supply Neste’s NEXBTL renewable diesel to the state under the name Nexdiesel.

Also in California, the City and County of San Francisco has completely ended its use of petroleum diesel in the city’s fleet and replaced it with renewable diesel, a change that will achieve a significant 50 percent GHG emissions reduction, or 50,000 metric tons, over petroleum diesel. San Francisco is now the largest city in North America to use renewable diesel, which is being produced by Neste and distributed by GGP.

In fiscal year 2014, the City of San Francisco used 5.8 million gallons of diesel fuel, of which 4.9 million was petroleum diesel. The city’s 1,966 diesel vehicles are affected by this change, which completely ends the use of petroleum diesel at the 53 city-run fueling facilities. The switch to renewable diesel is part of the city’s ongoing efforts to reduce emissions in its fleet and combat climate change. The city started using cleaner forms of diesel fuel by transitioning to a blend of biodiesel. Before the switch to renewable diesel, most of the municipal fleet was using a blend of 20 percent biodiesel and 80 percent petroleum diesel.

In Oregon, the Department of Energy (DOE) is helping public entities across the state tap into the emerging renewable diesel market. The results include reduced emissions and a decrease in fleet maintenance for the Eugene Water and Electric Board (EWEB), which began testing the alternative fuel in September 2015.

In 2014, DOE issued EWEB a tax credit for installing an alternative fuel station to run its fleet of vehicles. The station was designed to pump biodiesel, but DOE senior policy analyst Rick Wallace thought the board could go even greener by using renewable diesel rather than biodiesel.

“Moving our fleet to biodiesel helped us achieve our carbon reduction goals,” said EWEB Fleet Manager Gary Lentsch. The board quickly realized the benefits of switching from petroleum diesel to renewable diesel for its fleet of 85 diesel vehicles. Using a regular gallon of diesel fuel emits more than 30 pounds of GHG into the air, whereas a gallon of renewable diesel emits fewer than 10 pounds. EWEB is currently using about 6,100 gallons of renewable diesel a month from a Eugene, Oregon, supplier.

EWEB also discovered that renewable diesel is much easier on vehicle engines and diesel particulate filter systems than petroleum diesel. After making the switch, Lentsch noticed a significant decrease in maintenance issues.

“We have telematics on all of our vehicles and equipment so we know what’s going on with our fleet,” he said. “It wasn’t uncommon to get alert codes on our vehicles and our shop would have to manually empty the filters [known as regeneration]. After we switched to renewable diesel, our trucks don’t require regeneration as often as when they were using regular diesel. As a matter of fact, the shop hasn’t done a manual re-gen since the switch. Now our trucks are staying in service longer with less downtime.”

On the equipment manufacturer side, both Mack Trucks and Volvo Trucks North America have approved the use of renewable diesel for all of their engines. Both companies credited the fuel’s reduction in GHG and particulate emissions as well as decreased maintenance costs for their support of renewable diesel. Volvo Trucks also noted that renewable diesel has a much lower cloud point, which improves the low-temperature performance issues sometimes associated with biodiesel. Both companies cited the California Air Resources Board’s life cycle analysis of renewable diesel under its Low Carbon Fuel Standard that shows reductions in GHGs by 15 to 80 percent, depending on feedstock source. 

California Welcomes New Biodiesel Facility

The Golden State has a new 20-million-gallon-per-year biodiesel facility in the San Joaquin Valley. Located in Five Points, California, a productive agricultural region, the new Biodico Westside plant operates entirely on renewable heat and power, and incorporates advanced real-time and remote monitoring for complete system automation. In addition to processing multi-feedstocks, including used cooking oil, vegetable oil, and animal fats, the facility also utilizes anaerobic digestion, gasification, and an advanced utility scale solar cogeneration system.

Biodico’s plant went online in December 2015 and was supported, in part, by grants from the California Energy Commission and in collaboration with the United States Navy; University of California (UC), Davis; UC Santa Barbra; and California Polytechnic State University, San Luis Obispo. The new facility also addresses energy security with its modular construction and ease of deployment, characteristics particularly relevant to the Navy, which Captain Monty Ashliman, commanding officer at Naval Air Station Lemoore, noted during Biodico Westside’s opening ceremony.

“The Navy is one of the largest consumers of diesel fuel in the world,” stated Ashliman. “It fuels many of our ships, aircraft, vehicles, and generators. Without it our readiness would be compromised, which is why Secretary of the Navy Ray Mabus has set a goal of reducing the Navy’s petroleum consumption by 50 percent by 2020 through energy efficiency and the use of petroleum alternatives. This [Biodico Westside’s] sustainable technology was developed as a collaboration among Biodico, the California Energy Commission, and the Naval Facilities Engineering Command Expeditionary Warfare Center, and showcases cutting edge biofuel and bioenergy technology.”

Many of the 45 jobs at Biodico Westside are created in partnership with West Hills Community College. The company developed an internship specifically for the college and hires graduates of their two-year industrial technology program.

Connecticut Plant Acquired

Kolmar Americas Inc., an integrated petroleum, petrochemicals, and renewable fuels marketing and trading company headquartered in Bridgeport, Connecticut, has acquired American GreenFuels LLC located in New Haven, Connecticut.

Formerly known as Greenleaf Biofuels LLC, the biodiesel plant, which is the largest operation of its type in New England, operates from within New Haven Terminal at New Haven Harbor and has been steadily increasing production in each of the last three years. The plant is forecast to produce approximately 15 million gallons of biodiesel in 2016. This is the first such acquisition in Kolmar Americas’ history. The company has had a strategic relationship with the biodiesel plant for several years. American GreenFuels produces biodiesel from used cooking oil and other waste greases sourced from within Connecticut and throughout the northeast United States. The biodiesel is used primarily by companies selling diesel fuel and by Connecticut homeowners after it is blended with conventional heating oil.

Iowa Biodiesel Production Breaks Record in 2015

Despite policy uncertainty for nearly all of 2015, biodiesel production in Iowa set a new record of 242 million gallons, according to the Iowa Renewable Fuels Association (IRFA). Production was up from 227 million gallons in 2014 and topped the previous record of 230 million gallons set in 2013. Once national numbers are announced, Iowa is expected to again lead the nation in biodiesel production in 2015.

The amount of biodiesel produced from soybean oil in Iowa decreased in 2015, but remains the largest feedstock in Iowa, accounting for 66 percent of production. Animal fats held steady at 19 percent of biodiesel feedstocks. With changes to some biodiesel plants’ technology, distillers’ corn oil made a big jump to 10 percent of production, up from just 2 percent last year. Used cooking oil and canola oil accounted for the remaining 5 percent.

“It must be said that Iowa’s record biodiesel production in 2015 is a testament to the efficiency of Iowa’s plants and to the effectiveness of Iowa’s state level policies promoting the production and use of biodiesel,” stated IRFA Executive Director Monte Shaw. “Considering neither the federal Renewable Fuel Standard (RFS) nor the federal biodiesel blender’s tax credit were in effect for the vast majority of 2015, the resiliency of Iowa biodiesel producers really shone through in 2015. With the federal RFS and tax credit in place for 2016, we are hopeful for big things.”

Iowa is the nation’s leader in renewable fuels production with 12 biodiesel facilities with the capacity to produce nearly 315 million gallons annually and 43 ethanol refineries with a 4-billion-gallon per-year capacity, including nearly 55 million gallons of annual cellulosic ethanol production capability.

London Buses to Run on Waste Fats and Oils

One-third of the bus fleet in London, England, will soon be running on cleaner-burning biodiesel produced from used cooking oil and tallow. Two London bus operators, Stagecoach and Metroline, have signed agreements with Argent Energy (UK) Limited to supply them with a 20 percent biodiesel (B20) blended with petroleum diesel.

By March, almost 3,000 of the city’s 8,900 buses will be powered by the B20 fuel blend after 642 buses began using the fuel for two months on a trial basis. The move will result in a reduction in carbon dioxide emissions of 21,000 metric tons each year. This is in addition to the 48,000 metric-ton carbon dioxide reduction from 2013 levels as a result of using lower emitting buses such as hybrids.

London’s bus network is one of the largest in the world, carrying almost 2.4 billion passengers annually. Currently, the fleet uses around 240 million liters (63.4 million gallons) of fuel each year. It is estimated about 80 million liters (21.1 million gallons) of biodiesel will be consumed yearly under the agreements.

Argent Energy pioneered the large-scale commercial production of biodiesel in the UK and is the country’s foremost producer of biodiesel from wastes and residues.

Massachusetts Home to First Community-owned Plant

Co-op Power, a consumer-owned sustainable energy cooperative, expects its new biodiesel plant in Greenfield, Massachusetts, to come online early this year. The plant will receive used cooking oil from local restaurants, schools, and institutions and convert it into biodiesel.

According to Co-op Power CEO Lynn Benander, the Northeast Biodiesel Plant is not the first biodiesel refinery in the region but it will be the first that is locally owned. She also noted that one of the biggest reasons the Co-op Power became involved in the project was the limited access to biodiesel in the area. Isaan Baker, director of community-shared solar programs at Co-op Power, says there were opportunities to have outside investors join the project, but keeping the investment local helped enhance community control.

The plant will initially produce 1.75 million gallons of biodiesel per year, with an expansion to 3.5 million gallons within the first 12 months. Co-op Power is investing $3.5 million to build the plant that will be run by a staff of 14.

REG Buys Sanimax Biodiesel Plant

Renewable Energy Group (REG) Inc. has signed an asset purchase agreement with Sanimax Energy LLC to acquire Sanimax’s 20-million-gallon-per-year biodiesel plant in DeForest, Wisconsin, for approximately $11 million in cash and 500,000 shares of REG common stock. REG will also pay Sanimax up to an additional $5 million in cash over a period of up to seven years after closing based on the volume of biodiesel produced at the plant, which will be re-named REG Madison LLC. Sanimax operates a grease processing facility at the same location, although that facility is not part of the acquisition. Closing of the transaction is subject to customary closing conditions.

“This agreement is in line with our business plan to improve focus on our core businesses,” said Martin Couture, Sanimax’s president and chief executive officer. “We are pleased that our biodiesel employees will have an opportunity to pursue their career with an industry leader. This is a reflection of the excellent work they have achieved over the past several years. Sanimax looks forward to continuing its excellent business relationship with REG as a shareholder and a reliable feedstock supplier.”

The Sanimax biorefinery began production in 2007. Using the same REG patented and proven high free fatty acid processing technology as the company’s Seneca, Illinois, plant, it produces biodiesel from lower cost feedstocks including yellow grease, animal fats, and inedible corn oil in addition to refined vegetable oils.

Upon closing of the transaction, REG will own 11 active biomass-based diesel refineries in seven states with a combined production capacity of 452 million gallons.

More Charges and Sentencing in Biodiesel Fraud Cases

David Dunham of Pennsylvania and Ralph Tommaso of New Jersey have been charged with engaging in a multi-million-dollar conspiracy involving used cooking oil.

From 2010 through 2012, Dunham and Tommaso operated, respectively, Smarter Fuel Inc. and Environmental Energy Recycling Corporation LLC, coordinating the activities of the companies and then formally merging as Greenworks Holdings LLC. According to a 101-count indictment, the defendants falsely claimed to have produced and sold renewable fuel for which they misappropriated approximately $50 million in payments, subsidies, and other benefits. Both men allegedly defrauded government programs intended to encourage the production of renewable fuel by claiming credits for fuel they never produced, and that otherwise did not qualify, thus stealing tens of millions of dollars from the United States (US) government. It is further alleged that Dunham and Tommaso stole millions more by fraudulently claiming and generating tradable credits that they sold to unsuspecting purchasers who believed these credits satisfied their legal obligation to use a certain quantity of renewable fuel per year.

The defendants, through their companies, collected used cooking oil from restaurants and other food service locations, sometimes processing it to remove particles, water, and other waste. They then sold the cleaned product primarily to renewable fuel producers.

Dunham and Tommaso did not sell the cleaned used cooking oil as a final fuel but allegedly fraudulently claimed otherwise, applying for and receiving government subsidies for every gallon of cleaned used cooking oil they produced, plus much more. In 2010, Dunham and Tommaso purportedly claimed subsidies and other payments on more than 17.5 million gallons of product when they produced less than 6 million gallons. In 2011, both men allegedly received subsidies and other payments on more than 18 million gallons when only about 7.5 million gallons were produced. Of the cleaned used cooking oil they did produce, the vast majority did not qualify for a credit or subsidy. The defendants’ allegedly fraudulent claims included more than one million gallons of the wastewater from their process, the non-fuel sales of their product as a feedstock to biofuel producers, and transactions that existed on paper only. 

The defendants are charged with conspiracy, providing false statements to the government, wire fraud, tax fraud, and obstruction of an Internal Revenue Service (IRS) audit and a US Department of Agriculture examination. Dunham is also charged with underreporting his taxable income for two years and allegedly obstructed an IRS audit of Smarter Fuel.

In a related matter, William Barnes, a professional engineer, was charged with two counts of conspiring to provide false statements to the Environmental Protection Agency (EPA). He was hired to help the companies register for EPA’s program as renewable fuel producers and allegedly conspired with the company owners to provide false engineering reports to EPA.

In a separate case, after pleading guilty in April 2015, Joseph Furando of New Jersey was sentenced in early January in Indianapolis, Indiana, to 20 years in prison, three years of supervised release, and to pay more than $56 million in restitution for his role in an elaborate scheme to defraud biodiesel buyers and taxpayers by fraudulently selling biodiesel incentives.

From 2007 through 2012, E‑biofuels LLC owned a biodiesel plant in Middletown, Indiana. Furando admitted that sometime in late 2009, he and his companies began supplying E‑biofuels with biodiesel that was actually made by another company and had already been used to claim tax credits and subsidies. Because these incentives had already been claimed, Furando could purchase the biodiesel at low prices, sometimes for more than $2 per gallon less than biodiesel eligible for the credits. He then supplied the product to E‑biofuels that he and his codefendants claimed to have produced. They then illegally recertified it and sold it at the much higher market price for incentivized biodiesel. Over the course of about two years, the defendants fraudulently sold more than 35 million gallons of fuel for a total cost of over $145.5 million and realizing a profit of more than $55 million at the expense of customers and taxpayers.

Furando’s companies, CIMA Green LLC and Caravan Trading LLC, were also sentenced to pay $56 million in restitution and million-dollar fines. Although largely defunct, the companies must serve two years’ probation to ensure that what assets remain are properly directed toward victims. The court imposed, but suspended, the fines. A third company, E‑biofuels, operated by Furando’s codefendants Craig Ducey, Chad Ducey, and Chris Ducey, was also sentenced to pay the $56 million in restitution. E-biofuels is in bankruptcy and its few remaining assets are being distributed through the bankruptcy process.

All the other defendants have pled guilty and are awaiting sentencing. Another co-conspirator, Brian Carmichael, was charged in a separate case and cooperated with the government before the criminal cases were filed. In December 2015, he was sentenced to five years of imprisonment.

February 2016 RENDER | back